Jan Yngve Sand

Demand-side Spillovers and Semi-collusion in the Mobile Communications Market

We analyze roaming policy in the market for mobile telecommunications. Firms undertake quality improving investments in network infrastructure in order to increase geographical coverage, capacity in a given area, or functionality. Prior to investments, roaming policy is determined. We show that under collusion at the investment stage, firms’ and a benevolent welfare maximizing regulator’s interests coincide, and no regulatory intervention is needed. When investments are undertaken non-cooperatively, firms’ and the regulator’s interests do not coincide. Contrary to what seems to be the regulator’s concern, firms would decide on a higher roaming quality than the regulator. The effects of allowing a virtual operator to enter are also examined. Furthermore, we discuss some implications for competition policy with regard to network infrastructure investment.

Do internet incumbents choose low interconnection quality

Abstract We analyze the interconnection incentives for two networks that differ with respect to the size of their installed bases. In the first part, we prove that the smaller firm may be harmed in competition for new customers if the installed base customers pay a high price. In the second part, we assume that the interconnection quality to customers in the installed bases is set before the interconnection quality to new customers. We show that both firms prefer perfect interconnection quality to new customers if the installed base interconnection quality is sufficiently high, and we discuss what policy implications this may have.

Endogenous Technology Sharing in R&D Intensive Industries

This paper analyses the endogenous formation of technology sharing coalitions with asymmetric firms. Coalition partners produce complementary technology advancements, although each firm determines its R&D investment level non-cooperatively and there is no co-operation in the product market. We show that the equilibrium coalition outcome is either one between the two most efficient firms, or a coalition with all three firms. The two-firm coalition is the preferred outcome of a welfare maximising authority if ex ante marginal cost is sufficiently high, and the three-firm coalition is preferred otherwise. Furthermore, we show that the equilibrium outcomes result in the lowest total R&D investment of all possible outcomes. Aircraft engine manufacturing provides a case study, and indicates the importance of anti-trust issues as an addition to the theory.

Foreclosure in Contests

We consider a contest where one firm has a cost advantage over rivals. Instead of taking the set of rivals as given, the favorite can transfer the source of its advantage wholly or partially to a subset of rival firms. Foreclosure of those firms that do not receive the cost reduction may result. We present conditions under which this transfer will occur and consider the welfare properties of exclusion. The expected payoff of the dominant firm is independent of the size of the cost reduction transferred to rivals. Applications include lobbying, patent races and access to essential infrastructure.

Keep on Fighting: Dynamic Win Effects in an All-Pay Auction

We investigate a multi-period contest model in which a contestant.s present success gives an advantage over a rival in the future. How this win advantage affects contestants.efforts, and whether the laggard gives up or keep on fighting are key issues. We find that the expected effort of the laggard will always be higher than the rival at some stage in the series of contests, and this is most likely to happen when at a large disadvantage or at a late stage in the series.